ASML Holding holds a strong hand in the semiconductor lithography game. The company is one of the world's largest makers of semiconductor manufacturing equipment. In particular, it vies with Japanese giants Canon and Nikon for supremacy in the market for the specialized photolithography systems used to imprint microscopic circuitry patterns onto silicon wafers. To keep on top of advanced technology, the company formed strategic partnerships with a range of companies, including Carl Zeiss and Philips Electronics. Customers include silicon foundries (contract semiconductor manufacturers), such as Taiwan Semiconductor Manufacturing. ASML gets about two-thirds of its business from Asia.
The semiconductor industry is notorious for its boom-and-bust cyclicality, and the global recession is driving the industry's current downturn, reducing sales of consumer electronics and other products that contain microchips. ASML's sales volume took a hit in 2008 as a result, falling some 26% from the year before. Unit volume declined from 260 lithography systems sold in 2007 to 151 in 2008. ASML has a limited number of customers, since fewer chip companies are investing in wafer fabrication facilities and many are outsourcing production to the silicon foundries. In a downturn, even big spenders like Intel and Samsung Electronics reduce their capital expenditure budgets, buying less production equipment to save money.
ASML's business also is restricted by the production capacity of Carl Zeiss, the company's sole supplier of lenses and other critical components. There are a limited number of suppliers for the excimer laser illumination systems used in ASML's deep-ultraviolet lithography systems, principally Cymer and Gigaphoton (a joint venture of Komatsu and USHIO). In addition, ASML's product line is relatively small and definitely expensive -- new systems are priced at more than €20 million ($28 million and up) -- which explains the limited number of customers.
ASML's quest to be the top supplier of lithography systems was boosted by its 2001 purchase of Silicon Valley Group (SVG). The acquisition also expanded ASML's product offerings into deposition systems (which layer materials onto silicon wafers) and thermal processing systems (which condition wafers at various stages during production), but ASML subsequently divested itself of many of the non-lithography product lines it acquired in the SVG deal. In late 2012 it agreed to acquire US-based Cymer for 1.95 billion Euros (about $2.5 billion); Cymer controls light-based technology used in creating next-generation chips.
The historically dismal semiconductor industry slump of 2001-2003 led the company to announce various other restructuring efforts, including rounds of layoffs and the sale of its thermal processing business, which became a freestanding company called Aviza Technology. Aviza filed for Chapter 11 protection from creditors in 2009.
ASML also makes high-precision optical components and systems through its ASML Optics unit. – less